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Banking

How has the credit crunch altered the way clients are deciding upon and conducting their financing requirements?

Jim Esposito, head of syndicate and debt financing at Goldman Sachs
Funding decisions are more important than ever before. Discussions with borrowing clients have become much more strategic in nature and are taking place at much higher levels of an organization. Borrowers are looking for sound advice and a safe pair of hands. Funding decisions and execution tactics are anything but cookie-cutter. The difference between success and failure is much greater than a year ago.

Jean-François Mazaud, deputy head of capital raising and financing at SG
Since June 2007, we have observed three different phases:

From July to December 2007: what I would call the denial phase. After the initial shock of the summer crisis, issuers were either believing that the crisis would be subdued or that it would not have any material impact on their balance sheets.

From Jan 2008 to March 2008: the dark phase. All market participants quickly understood during January that what many had hoped for (just a liquidity crisis) was turning into a major financial crisis with systemic risks embedded. The peak was reached with the collapse of Bear Sterns. Major indicators showed the dislocation of debt capital markets: historically high gap between cash and CDS indices, or between three-month Eonia and overnight rates, historically low primary bond volumes, fall of new loan volumes, closure of capital markets segments (ABS, high-yield, short-dated FRNs, long-dated senior bonds)

From March 2008 to date: the hope phase.

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